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Fed Pricing Off Jefferson/Harker-Induced Lows

STIR

FOMC-dated OIS have moved off of Wednesday’s late Jefferson/Harker-induced base, with the passage of the debt ceiling legislation through the House and firmer than expected Chinese Caixin manufacturing PMI data overnight providing little in the way of further headwinds.

  • FOMC-dated OIS last show ~9bp of tightening for next month’s meeting, with a cumulative 22bp of tightening priced through July. Beyond that, ~36bp of cuts are priced by year-end.
  • As a quick reminder, Fed Governor Jefferson pointed to the positives of skipping a hike at the June FOMC, while Philadelphia Fed President Harker (’23 voter) also supported the idea.
  • WSJ Fed watcher Timiraos followed those comments up with his latest article (click for full article), noting that “Federal Reserve officials signaled they are increasingly likely to hold interest rates steady at their June meeting before preparing to raise them again later this summer.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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